October 8, 2023

CMA approves merger of two railway signaling system suppliers

On October 4, 2023, the Competition and Markets Authority announced that it no longer had concerns regarding the $1.7 billion proposed merger of Hitachi Rail Ltd and Thales SA’s Ground Transportation business (“GTS”), two global suppliers of signaling systems for mainline and urban railway networks.  An in-depth investigation by the CMA into the proposed merger concluded that the merger would affect competition regarding the supply of digital mainline signaling systems, which are increasingly being used in UK’s main railway networks.  Because Thales and Hitachi are both well placed to supply these systems, the CMA found that the merged company would have very few credible competitors.  In response to these concerns, Hitachi offered to sell its existing mainline signaling business in the UK, France, and Germany.  Provided that the CMA approves the purchaser and Hitachi’s key customers in these countries agree to the transfer of relevant signaling contract, the CMA considers this to be an “effective and proportionate remedy” that will keep costs down, maintain a high quality of service and promote innovation.

While the CMA also initially had competition concerns regarding the supply of Communications Based Train Control (“CBTC”) signaling systems that are frequently used in urban rail systems such as the London Underground, these concerns were put to rest based on new evidence obtained by the CMA after its initial provisional findings.  The CMA concluded that, while Thames is an important supplier to the London Underground, this particular rail system requires suppliers with significant expertise in delivery CBTC systems, and it was unlikely that Hitachi would attain the required level of experience to deliver CBTC to the London Underground in time for its next major TfL signaling tenders.

CMA Press Release | CMA Final Report | Merger Inquiry Timeline